New builds in australia set for a healthy year

Photo credit: 8LettersUK

The new-build sector in Australia is set for a "healthy" 2016, the industry predicts.

2015 was "a stellar period for national new home building", says the Housing Industry Association in its latest forecast for the market. Indeed, new dwelling commencements increased for a third consecutive year in 2014/15 to a record high of 211,860. It is only the fifth time in the past 60 years that housing starts have racked up three years of growth in a row. The nearly 212,000 starts mark a record-high level, 13 per cent above the previous cyclical high of 187,000 recorded in 1994.

The rate of growth in residential property prices, meanwhile, peaked in Sydney and Melbourne, even though "precious few households outside these two markets" enjoyed anything approaching boom conditions.

The HIA forecasts housing starts to exceed 200,000 in 2015/16, down 5.5 per cent from the previous year, although given that was a record peak, only a moderate decline.

"If we can progress right through 2016 with commencements holding up at an annualised level above 180,000," says the group, "that outcome should be regarded as a healthy one."

Nonetheless, 2016 represents "heightened uncertainty" for property market. Out of 13 factors that contribute to the HIA report, including figures from the ABS, HIA and other data, just three have positive outlook, with nine pointing downwards - the weakest the report has been in over four years.

However, the decline in these measures is generally modest, with none of them falling off a cliff.

According to the ABS, the different types of properties all have very different outlooks, with the HIA projecting further short-term growth for detached houses, semi-detached dwellings (of two storeys) and and units of one or two storeys.

Overall, New South Wales is the strongest housing market in Australia, followed by Victoria.